The chief executive of the German Brewers' Association has warned that price increases due to the war in Ukraine are set to hit the country’s breweries shortly. The rising cost of gas, fertiliser, fuel and raw materials could cause a sharp increase in the price of beer.
After two years of reduced sales due to bar and restaurant closures during the COVID-19 pandemic in Germany, the food and drink industries thought they’d found the perfect opportunity to get back on their feet when the roll-back of COVID-19 measures was announced in early 2022. Unfortunately, that no longer seems to be the case.
While lockdowns and closures are no longer an imminent threat, the industry, much like many other sectors, is being battered by price rises in the wake of the war in Ukraine. Brewers across the country are seeing their costs spike due to supply issues and the increasing cost of energy.
"The development is dramatic for the breweries in Germany: We are seeing unprecedented price increases for raw materials, packaging, energy and logistics," said Holger Eichele, General Manager of the German Brewers' Association. "The costs are skyrocketing; they threaten to get completely out of hand. It is therefore not surprising that such drastic cost increases have to be reflected in the final price."
Despite the cost and supply concerns, the federal government has said that it does not believe there will be a shortage of beer anytime soon in Germany. There will however be tough times ahead for the brewing industry.
One of the most pressing concerns for brewers is that Germany’s reliance on gas from Russia could put them in a potentially catastrophic position if Russia were to cut the supply with little-to-no notice. "In the worst case, it could lead to production - including food - coming to a standstill," said the Federal Association of the German Confectionery Industry (BDSI).
“Even with the corona pandemic, energy, agricultural raw materials, packaging, but also transport have become massively expensive,” the association stressed, adding that the crisis in Ukraine has only exacerbated the issues that the industry has already suffered with for over two years. President of the German Retail Association (HDE), Josef Sanktjohanser, said that while prices had already risen by 5 percent since the peak of the COVID-19 pandemic, "The second wave of price increases is coming, and it will certainly be double digits."